Income Tax Appellate Tribunal - Ahmedabad
Anita Gautam Jain, Vapi vs Assessee on 24 August, 2011
IN THE INCOME TAX APPELLATE TRIBUNAL
'SMC" BENCH - AHMEDABAD
(BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER)
ITA No.1685/Ahd/2009
A. Y.: 2005-06
Smt. Anita Gautam Jain, Vs Income Tax Officer,
Plot No.2, GR-4/B, Gurudev Complex, Vapi,, Ward - a.
Opp. Imrannagar, Vapi
Vapi
PA No. AEMPJ 8710 N
(Appellant) (Respondent)
Appellant by None(Written submission)
Respondent by Shri Vinod Tanwani, DR
Date of hearing: 24-08-2011
Date of pronouncement:26-08-2011
ORDER
PER BHAVNESH SAINI, JM: This appeal by the assessee is
directed against order of the CIT(A)-I, Surat dated 16-03-2009 for assessment year 2005-06, challenging the levy of penalty u/s 271 (1) ( c ) of the IT Act.
2. In the penalty order, the AO has stated that the assessee had introduced cash credit of Rs.53,500/- u/s 68 of the IT Act for 3 persons in respect of which the assessee failed to establish the identity of the creditors, their creditworthiness and genuineness of the transaction. Therefore, in the assessment order it was held that cash credits were not genuine and addition u/s 68 of the IT Act was made and penalty proceedings were initiated. During the course of penalty ITA No. 1685/Ahd/2009 2 Smt. Anita Gautam Jain Vs ITO, Vapi, W- 1, VApi proceedings, the AO asked the assessee as to why penalty be not levied. The assessee simply stated that confirmation letters were filed during the assessment proceedings. The AO stated that the reply of the assessee is factually incomplete. The confirmation letters filed by the assessee did not contain addresses of the lenders, it did not have Permanent Account Numbers and even the name was incomplete. Therefore, it was held that neither the identity of the lenders nor genuineness of the transaction nor the creditworthiness of the creditors has been proved. The AO, therefore, held that the assessee has furnished inaccurate particulars of income by showing her income as cash credits in bogus names and thereby concealed the income. Penalty was accordingly levied. The penalty order was challenged before the learned CIT(A) and the same submissions were reiterated. It was also stated that penalty is excessive which is almost 300%. The assessee also relied upon the decision of the Hon'ble Gujarat High Court in the case of National Textiles, 164 CTR 209 (249 ITR 125). The learned CIT(A) considering the facts of the case confirmed the penalty on merit but reduced the penalty to minimum. The appeal of the assessee was partly allowed. The findings of the learned CIT(A) in the appellate order are reproduced as under:
2.3 I have considered the submission made by the appellant and the observation o the A.O. The law regarding concealment of penalty has now been settled by the Hon'ble Supreme Court in the case of Union of India Vs. Dharmendra Textile Processors & Others (306-
ITR-277), (219-CTR-617) vide its order dated 29.09.2008. The Hon'ble Supreme Court has observed as under in para-25 of its order:-
ITA No. 1685/Ahd/2009 3Smt. Anita Gautam Jain Vs ITO, Vapi, W- 1, VApi "25. The explanations appended to s. 271(l)(c) of the IT Act entirely indicates the element of strict liability on the assesses for concealment or for giving inaccurate particulars while filing return. The judgment in Dilip N. Shroff's case (supra) has not considered the effect and relevance of Section 276C of the I.T. Act. Object behind enactment of Section 271(l) (c) r. w. explanations indicate that the said section has been enacted to provide for a remedy for loss of revenue. The penalty under that provision is a civil liability. Willful concealment is not an essential ingredient for attracting civil liability as is the case in the matter of prosecution under S.276C of the I.T. Act. "
In view of the above facts, it is clear that, by showing cash credits which it could not explain, the assessee has furnished inaccurate particulars of her income and hence the assessee has violated the provisions of Section 271(l)
(c). In view of recent decision of the Hon'ble Supreme Court in the case of Dharmendra Textile Processors (supra), penalty u/s. 271 (1) ( c ) for furnishing inaccurate particulars is clearly leviable. In view of th4ese reasons, I find this case to be a fit case for levy of minimum penalty of 100% of tax, sought to be evaded. Therefore, minimum penalty to addition is confirmed and balance is deleted.
Hence, the grounds of appeal are partly allowed.
3. In the result, the appeal is partly allowed."
3. None appeared on behalf of the assessee despite service of notice. Written submission is forwarded by the learned Counsel for the assessee which has been taken into consideration. On the other hand, the learned DR relied upon the orders of the authorities below.
4. I have considered the rival submission and do not find any merit in the appeal of the assessee. The assessee in the written ITA No. 1685/Ahd/2009 4 Smt. Anita Gautam Jain Vs ITO, Vapi, W- 1, VApi submission submitted that notice for levy of the penalty was issued on 28-02-2007 which was served upon the assessee on 15-03-2007. Therefore, penalty order passed on 31-08-2007 is barred by limitation according to section 275 (1) (c) of the IT Act. The submission of the assessee is devoid of merit. Section 275 (1) (c) of the IT Act provides that no order imposing penalty under this Chapter shall be passed in any other case, after expiry of financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed, or six months from the end of the month in which action for imposition of penalty is initiated, whichever period expires later. According to the written submission of the assessee such period already expired on the date of passing of the penalty order. The admitted fact is that notice of levy of penalty was issued on 28-02-2007 which was served upon the assessee on 15-03-2007; therefore, the period of six months should be counted from the end of the month in which action for imposition of penalty is initiated. If the said period is counted, the same would expire on 31-08-2007, therefore, the AO correctly passed the order within the period of limitation. The contention of the assessee is, therefore, rejected. On consideration of the merit of the case, I am not inclined to interfere with the orders of the authorities below. The assessee relied upon the decision in the case of National Textiles (supra) in which it was noted that in order to justify levy of penalty, two factors must co-exist - (i) there must be some material or circumstances leading to the reasonable conclusion that the amount does represent the assessee's income. It is not enough for the purpose of penalty that the amount has been assessed as income and (ii) the ITA No. 1685/Ahd/2009 5 Smt. Anita Gautam Jain Vs ITO, Vapi, W- 1, VApi circumstances must show that there was animus, i.e. conscious concealment or act of furnishing of inaccurate particulars on the part of the assessee. It was found in this case that there was no circumstance leading to reasonable positive inference that in assessee's case the cash credits were arranged temporarily loans was false. However, in the case of the assessee the AO noted in the assessment order that the assessee introduced unsecured loans from various persons as per balance sheet and the assessee produced confirmation and proof of source of their income except in the cases of these 3 persons amounting to Rs.53,500/- which is matter under consideration. In the absence of any material addition was made by the AO because the onus upon the assessee to prove genuine credit was not discharged. The AO further noted that in the absence of complete details even the creditors could not be summoned. Even before the AO at the penalty stage the assessee only explained that the assessee produced confirmation letters. Except that nothing was explained as to why penalty should not be imposed in the matter. It is also admitted fact that the assessee did not contest the addition before the appellate authorities. In the absence of any evidence or material to support the genuineness of the credits, the AO was justified in holding that the assessee furnished inaccurate particulars by showing her income as cash credits in the bogus names and thereby concealed income. The finding of fact recorded by the AO in the penalty order is not rebutted by the assessee through any evidence or material on record. Even in the paper book, no such alleged confirmation has been filed so that ITA No. 1685/Ahd/2009 6 Smt. Anita Gautam Jain Vs ITO, Vapi, W- 1, VApi the same could be perused. The Hon'ble Delhi High Court in the case of CIT Vs Harparshad and Company Ltd. 328 ITR 53 held as under:
"Held, that the reasons given by the Tribunal for quashing the penalty proceedings were irrelevant, not germane to the issue and the Tribunal had lost sight of aspects which had been conclusively established in the quantum proceedings. The Tribunal had failed to take note of the fact that part of the claim as commission was allowed to the assessee not because R had rendered any services but because J had rendered services for which it was paid 1 per cent of the commission by R out of the 3 per cent received by her. As far as commission to R was concerned, it was accepted by the Tribunal in the quantum proceedings that she did not render any services at all. The assessee had failed to offer any explanation in respect of the addition of Rs.1,83,078 and it could be deemed to have concealed the particulars of income or furnished inaccurate particulars thereof, by virtue of this explanation. The Tribunal was not justified in deleting the penalty imposed by the Income-tax Officer under section 271 (1) (c) of the Act.
The findings given in assessment proceedings are relevant and have probative value. Where the assessee produces no fresh evidence or presents any additional or fresh circumstances in penalty proceedings, he would be deemed to have failed to discharge the onus placed on him and the levy of penalty could be justified.
Even if there is no concealment of income or furnishing of inaccurate particulars, but on the basis thereof the claim which is made is ex facie bogus, it may still attract penalty provision.
ITA No. 1685/Ahd/2009 7Smt. Anita Gautam Jain Vs ITO, Vapi, W- 1, VApi The Explanation appended to section 271 (1)
(c) of the Act entirely indicate the element of strict liability on the assessee for concealment or for giving inaccurate particulars while filing return. The object behind enactment of section 271 (1) (c) read with the Explanations indicate that the section has been enacted to provide for a remedy for loss of revenue. The penalty under that provision is a civil liability. Willful concealment is not an essential ingredient for attracting civil liability as is the case in the mater of prosecution under section 276C of the Act."
The facts and circumstances of the case clearly justify levy of the penalty in the matter because the assessee failed to explain any of the cash credits in the matter. The cases relied upon by the assessee in the written submission are clearly distinguishable from the facts of this case. Considering the facts of the case in the light of the finding of the learned CIT(A) relying upon the decision of the Hon'ble Supreme Court in the case of Dharmendra Textile Processors & Others (supra), I do not find any justification to interfere with the order of the learned CIT(A). The Hon'ble Punchab & Haryana High Court in the case of CIT Vs Deepchand, 336 ITR 292 held that "once it was held that the assessee has received bogus gifts, the only conclusion is that the assessee has furnished inaccurate particulars of his income and the order of the Tribunal deleting the penalty is unsustainable in law." There is no merit in the appeal of the assessee and the same is accordingly dismissed.
ITA No. 1685/Ahd/2009 8Smt. Anita Gautam Jain Vs ITO, Vapi, W- 1, VApi
5. In the result, the appeal of the assessee is dismissed.
Order pronounced in the open court.
Sd/-
(BHAVNESH SAINI) JUDICIAL MEMBER Lakshmikant/-
Copy of the order forwarded to:
1. The Appellant
2. The Respondent
3. The CIT concerned
4. The CIT(A)- concerned
5. The DR, ITAT, concerned
6. Guard File BY ORDER Dy. Registrar, ITAT, Ahmedabad